I don't think it was so much that resistive touchscreens were cheaper; rather, the dominant mobile interaction model had for a decade been oriented around styluses - handwriting recognition, small UI elements - and resistive touchscreens are simply more precise. Even with a capacitive screen, direct physical interaction such as smooth scrolling and pinch-zooming requires graphical horsepower that just wasn't on the table until around the time the iPhone came along.
